‘I can’t guarantee we won’t issue a Section 114 notice’

After weeks of repeated denials from Town Hall chiefs that the council is broke, last night there was a refreshing outbreak of frankness by an official.
KEN LEE reports

Tough job: finance director Lisa Taylor

One of the council’s most senior officials last night admitted: “I can’t guarantee that we won’t issue a Section 114 notice.”

Lisa Taylor is Croydon Council’s chief finance official, and she was speaking at a specially summoned meeting of the Town Hall scrutiny committee, called to seek further detail into the council’s financial woes.

A Section 114 notice is issued when a local authority cannot deliver a balanced budget. Only one other council, Northamptonshire in 2018, has had to ‘fess up to be broke in such a manner in the past 20 years. Now, it appears, Croydon could be among several councils forced to issue a S114, in part, at least, because of the additional financial demands caused by the covid-19 emergency.

Taylor’s frank admission comes despite previous assurances offered by the council CEO, Jo Negrini, and the leader of the Labour-run council, Tony Newman, that Croydon would not be issuing a Section 114 notice.

Taylor’s position to the committee appeared to suggest that unless Croydon is handed a significant bail-out from Whitehall, she would have no option but to issue a S114 notice, effectively handing the running of the council over to the MHCLG – Robert Jenrick’s Ministry of Housing, Communities and Local Government.

As one well-placed insider at Fisher’s Folly said today, “At this point, there has to be a Section 114, surely?

Now Negreedy is off, they can go for S114 and Newman can try and blame her on her way out.

“We are already there anyway – regardless of the label they give it. The MHCLG will attach so many conditions and have final sign-off, so it might as well be one.”

Tory minister Robert Jenrick: he will have final say on any Croydon bail-out

Taylor confirmed to the scrutiny committee Inside Croydon’s earlier reports that the council had been working together with MHCLG and CIPFA – the local council accountancy body – to find ways for Croydon to try to swerve the admission of defeat inherent in issuing a S114 notice.

In a council report published in February this year – ahead of the Town Hall budget-setting and before the coronavirus lockdown – Taylor had warned that the council was already in a perilous position, with £1.5billion debt and just £10million in reserves.

Taylor’s written report to the scrutiny committee last night said, “At the time of writing this report, I as the Section 151 officer for Croydon Council cannot give full assurance that the council will be able to deliver a balanced budget in 2020-2021 or future years.” Our italics added for emphasis.

“This is… due to a number of different factors and financial pressures that have impacted the council since the start of the covid-19 pandemic in March 2020. I can confirm that the Executive Leadership Team and cabinet are working together supported by the work of the Financial Review Panel and external partners including MHCLG and CIPFA to manage the budget and balance it.

This work and the development of these plans at the current time mean that as per the CIPFA guidance, I have not had to issue a Section 114 notice.

“However, if at any time I do not feel that these plans are developing at the right pace or are actually not deliverable I will have no choice but to issue a Section 114 notice.”

WHERE THE COUNCIL JOB CUTS WILL FALL

Lisa Taylor’s report to scrutiny committee included this table with more detail on where the job cuts will fall – detail which had previously been withheld from most councillors

Inside Croydon first reported that the council was on the brink of going broke three months ago. In the past few days, BBC London television, Property Week, the Local Government Chronicle and even the Financial Times have followed up our reports.

Taylor and Councillor Simon Hall, the cabinet member for finance, had been summoned to the scrutiny committee after their reports last month were deemed “do not provide sufficient detailed information”.

Sean Fitzsimons, the Labour councillor who chairs the scrutiny committee, expressed some surprise that Taylor was the most senior council official to attend the meeting. In the absence – officially of annual leave – of chief executive Jo Negrini, Fitzsimons said, “I had expected to have a member of the executive team here today.”

Shifa Mustafa: failed to show up for scrutiny

Fitzsimons had been told that Shifa Mustafa, the council’s executive director in charge of planning and development, was to have attended. But she clearly had more important things to deal with, and was a no-show.

The scrutiny committee call-in had sought “re-assurance that deletion of posts, previously filled by contractors, do not denude those teams of skills and experiences to deliver an effective service”.

The council is making 15 per cent cuts, which amounts to more than 400 jobs.

The meeting failed to demand any clarification on the position of Jo Negrini as chief executive, though Fitzsimons did refer, euphemistically, to “recent events” and referenced yesterday’s report in the Local Government Chronicle which – irony of ironies for Labour councillors who have been banned from mentioning this website – cited Inside Croydon’s coverage of the CEO’s departure.

Hall was allowed to wriggle off the hook and avoided updating the scrutiny committee on Negrini and her pay-off negotiations, saying it would be “inappropriate” for him to comment at this time. But he did not deny Negrini is leaving.

Ahead of the meeting, Hall had sent an email to Labour councillors advising them that the redundancy consultation period had been extended, as the trades unions had requested.

The deadline had been last Friday. It will now continue until September 9.

This, Hall told the meeting, is so that “exec directors have time to consider any representations that have been made”.

Which sort of puts into context the fortnight’s annual leave taken by chief exec Jo Negrini bang in the middle of the consultation to determine which of her staff are to lose their jobs.


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About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
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7 Responses to ‘I can’t guarantee we won’t issue a Section 114 notice’

  1. James Lee says:

    Astonishing on the part of the senior exec director who do not attend the scrutiny meeting leaving the Accountant to take the heat.
    But I guess Shiva must think – why she should be put on the hot seat for Jo who should be facing the panel.
    Even if Croydon council can.dodge the S.114 bullet it will be for a few years as it really need an insolvency practitioner or a gov debt write off to solve the problem long term.

  2. What a shocking set of figures! Nearly 70 fte posts coming out of adult services alone. It’s significant, looking at projected ‘savings’ that their pay rates are about half of other staff. These are likely to be almost all low paid women home care workers. It matters not whether they are “agency” staff paid for by Croydon, these are regressive cuts when the Chief Officer posts remain unscathed. Another couple of points, Croydon’s Children’s services are already low performing and the budget for vulnerable, elderly people should not be cut with all the dangers of what a second wave of Covid might do this winter. Overall, whether we get governed by (‘let’s get a party donation by chucking up blocks of flats’) Jenprick or not, these cuts will be devastating. Certainly Croydon and Council’s generally, need to get proper support from central government, despite the fact that much of this crisis is largely of the Council’s own making.

  3. Hazel swain says:

    someone should be asking how much all those painted pavements etc cost!

  4. Sebastian Tillinger says:

    I trust the people of Croydon are watching all this unfold as the election comes closer.

    Planning in this borough is a fiasco. Negreedy did nothing for planning in Croydon despite being originally employed to run it. That was before Newman had the harebrained plan to offer her a job she wasn’t qualified to do.

    Then Negreedy oversaw the appointment of Shifa Mustafa to run planning. Many of you will be saying “who?” Shifa Mustafa has overseen the demise of planning in this borough, allowing Scott to run amok but nobody ever hears from Ms Mustafa. Silence. And more silence.

    I would expect Mustafa will now want out of toxic Croydon – it provided her with a very generously paid job after she had been out of work for a couple of years following a little local controversy in Waltham Forest. Did that render her unemployable? Not by Croydon, or Negrini.

    The icing on the cake would be for Hall to agree a massive pay-out for Negreedy. Nobody should estimate the aforementioned ability to get cabinet members to do stupid things and Hall will be up for it.

  5. Lorraine Maskell says:

    None of these people should get any payouts. They are fortunate to be allowed to resign as opposed to being sacked. So much shocking waste of money over the last few years- Please Croydon get back to your whole reason for being I.e. running local services for the local communities benefit. Forget social engineering, hospitality, property development and anything else Local Authorites should dabble in and get back to running libraries, care homes, street lights etc. Do it well and we might just remember in an election!!

  6. Can someone tell me why did Croydon buy the flats in Brick by Brick’s Montpelier Road site before they put them on the open market?

    They are not finished yet and make a mockery of Brick by Brick and Croydon’s policy to avooid Right To Buy. All the flats the council rent out now will be eligible for Right To Buy, at massive discounts on their true value.

    What price did they pay for each flat, including the penthouse flat?

    • The latest £30million bail-out of Brick by Brick by the council, using yet more borrowing, was to buy up 165 homes most of which had been intended for shared ownership schemes – something Brick by Brick forgot to get themselves registered as approved suppliers to satisfy banks and building societies.

      The suggestion that BxB might be having a bit of a cashflow crisis of their own, with all their late-running schemes failing to sell, cannot be discounted.

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